Discord sows indecision

Synergy is often an element lacking when it comes to taking major financial decisions. Between departments, there is discord as to who is responsible for final decisions and ambiguity as to what benefits, or to whom, an undertaking may provide. All of this largely points to disorganisation within the decision-making process. Earlier, the Power Division had cancelled a $400 million loan by the Asian Development Bank, the vice-president of which is expected to visit Pakistan next month. However, the Economic Affairs Division is imploring the government to reconsider. A nuanced approach will have to be adopted.

Foremost, the purpose of the loan is to facilitate the energy sector; specifically, to replace obsolete manual electricity meters with smart meters so that the efficiency of energy distribution can be gauged, electricity theft mitigated, and flow of electricity better controlled. Hence, the objectives of the loan are crucial for salvaging the energy sector. Considering that $400 million is a fraction of the overall cost of $5 billion, indicating that a grand overhaul is required to rescue the country’s struggling energy and power distribution sector, the decision to cancel should be reconsidered. Although one is not a fan of opting for loans to aid the country in standing on its own feet, we have historically sought quick, short-term solutions leaving long-term repercussions to be dealt with later.

The disorganisation in the planning of the project needs to be corrected prior to the ADB VP’s visit. For example, the smart meters to be installed in areas where electricity theft is low should be redirected to areas where the project’s objectives will be better met. We understand the inhibition is due to the consideration of privatising power distribution companies under a separate IMF fund. Then perhaps, initial decisions should not have been taken so closely together for the separate projects. However, if rejecting this loan, on which Pakistan has been paying commitment fees, will jeapordise future lending, cancelling it may not be the way to go.

Published in The Express Tribune, September 24^th, 2018.

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